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[SYDNEY] Australian shares fell to a two-week low on Wednesday as concerns about the economic outlook for top trading partner China sent commodity prices lower, hitting sentiment towards stocks across the board.
Activity in China's factory sector fell to its weakest level in 6-1/2 years as domestic and export demand continued to slump, a private survey showed.
Overnight, copper prices slid 3.6 per cent, while oil was off 2 per cent and iron ore dipped 1.8 per cent as the Chinese government's efforts to stimulate growth failed to calm nerves in global markets.
By 0243 GMT, the S&P/ASX 200 index was down 2.0 per cent or 103.6 points at 5,000.0 points. The benchmark is down 4 per cent from its September peak and down 7 per cent for the year so far. "The conviction to buy the market is falling through the floor," said IG Markets strategist Evan Lucas. "It's at a point where the US is going to stop giving you money (via quantitative easing), maybe in Europe the whole stimulus may not be working, and from an Australian-centric point of view, what is going on with China?" Mining heavyweight BHP Billiton was down nearly 4 per cent, near a seven-year low hit in August, as plans to raise money with hybrid securities added to unease over its exposure to faltering commodities demand.
Rival Rio Tinto dropped 2.6 per cent while BHP spin-off South32 tumbled 5.3 per cent.
Energy stocks also fell in step with the oil price, with Woodside Petroleum off 2.5 per cent while its takeover target Oil Search lost 0.9 per cent, propped up by the prospect of a buyout.
Among banks, Commonwealth Bank of Australia and Westpac Banking Corp both shed 2.7 per cent while Australia and New Zealand Banking Group and National Australia Bank declined 2 per cent each.
Retailers fared no better, with supermarket firm Woolworths sliding 2 per cent and Wesfarmers, which owns rival Coles, falling 1.8 per cent.
New Zealand's benchmark NZX 50 index edged 0.1 per cent, or 6.53 points, lower to 5,690.26. It has proved resilient to further signs of a weakness in China, New Zealand's top export market.
Shares in petrol retailer Z Energy Ltd was the top performer, up 3.2 per cent after it said its acquisition of Chevron New Zealand was on track.
Infrastructure investor Infratil rose 2 per cent while telecoms firm Spark fell around 4 per cent.
Focus is on giant cooperative Fonterra's annual results on Thursday with investors looking for fresh clues on its farmgate milk price forecast.